Reference no: EM132843520

An individual with gross income of $78,000 had the following gains and losses from capital transactions during the current year:

1. Loss of $11,000 on the sale of principal residence held for 5 years;
2. Gain of $5,000 from the sale of securities held for 4 years;
3. Loss of $9,000 on the sale of municipal bonds held for 7 months;
4. Loss of $4,000 on the sale of a painting held for investment for 15 years.

Problem 1: What amount of the capital loss should the individual carry forward?

Option 1: $5,000
Option 2: $16,000
Option 3: $8,000
Option 4: $19,000